This blog is dedicated to the Iraqi Dinar

June Update (6/3/13)

Well another month has come and gone and darn the luck …. still no RV! Still no free float up to $1. Still no “pipping it up”, either. What gives? Why, it’s as if they intend to keep it right where it is!

On the heels of last month’s list of articles and statements about the Iraq Dinar Scam comes another Forbes article entitled Dinar Deception Driven by False Hope. The author discusses the faltering value of the dinar within Iraq which prompts the question, if a substantial revaluation of the dinar is imminent why are so many Iraqis abandoning the dinar for the US dollar? Some of the gurus might suggest that this was their plan all along, to get the dinar out of circulation in Iraq by having Iraqis turn to the US dollar. But another article tells us why.

During the past month of violence, the Iraqi dinar’s value has fluctuated radically. Now black market money men are using Iraq’s poorer passport holders to take advantage of a government measure to stabilise currency.

In the middle of a long queue waiting to enter a branch of the Rafidain Bank, Iraq’s state bank and its largest, is Baghdad woman who wished only to be known as Sadoun. She’s waiting in the queue to exchange her Iraqi dinars for US$500. Although she’s not saying so now, when she gets in there to the tellers, she may well pretend she is going overseas. She may even show her passport with a forged international visa stamped inside it. This allows her to take advantage of a recent government subsidy meant to artificially maintain the Iraqi dinar’s value; the state bank buys the dinars at a higher rate.

In Sadoun’s case, she will exchange IQD1,900 for one US dollar. In the unofficial exchange shops, which are found throughout Iraq, she would exchange around IQD 1,200 for one US dollar. So that difference of around 10 percent makes the waiting in this queue worthwhile.

Sadoun is not the only person doing this. The fresh round of violence in Iraq which has seen over 500 dead in May, among other factors like politics, unresolved financial issues and regional conflicts, has caused dramatic fluctuations in the value of the dinar against the US dollar. Most Iraqis use dinars for small purchases, like groceries, but use US dollars when buying bigger ticket items – one of the main reasons for this is that they don’t need to carry around bags of cash in dinars, they need only take several bills in a wallet.

As local economist Majid al-Suri told NIQAS, “the decline in the dinar against the US dollar since April can be attributed to many political issues, as well as security and financial administration problems. This has seen many merchants and businessmen transfer money outside the country, exchanging their Iraqi dinar for dollars because they’re afraid the dinar will only become more unstable. A few months ago, Iraq’s central bank was selling around US$50 to US$150 million a day,” al-Suri explained. “Now demand has increased and it’s selling more than US$400 million a day. That’s a huge increase.”

So the author tells us that violence has contributed to the decline in the dinar’s value within Iraq, and the popularity of the USD. He goes on to discuss the smuggling of US dollars into Iran which is also affecting the market value of the dinar. So unless you think that “The Plan” included hundreds of people being killed by terrorist bombs and US dollars being smuggled into Iran, I’d say that it’s not very likely that this is all leading up to a huge increase in the value of the dinar.

I’d like to offer a few observations on the article.

First, it’s obvious from the article that Iraqis still have dinar, and plenty of it. (Cash outside of banks for April is tentatively showing 33.4 trillion. By the way, the M2 is still climbing as well – at 78.8 trillion as of March.) All the talk we’ve heard from gurus about how there’s nothing but US dollars being used on the streets of Iraq is BS. Some claim that only wealthy Iraqis have dinar, but here we see that poorer Iraqis have access to dinar as well.

Second, we have heard a number of gurus assuring their followers that everything in Iraq is just peachy keen.Sure, there’s a few bombs going off but so what? More people are murdered in Chicago every year than in all of Iraq (which isn’t true, by the way). But this article points out just how volatile a situation Iraq is currently dealing with. Contractors are pulling out until things calm down. Construction has stopped. All of this affects the market price of the dinar, of course. And yet the gurus insist that everything’s pointing to prosperity for Iraq and a higher value for the IQD. Why do they say that? Because if they told their followers the truth their numbers would go down, and that’s what it’s all about. Keeping the faithful on board so they can carry on the con as long as possible.

And finally, when Shabibi was removed the dinar world was subjected to endless guru babbling about what it meant for the RV. Some said that Shabibi wouldn’t RV so Maliki replaced him. (Apparently that was wrong because Shabs has been gone for over half a year and no RV yet.) Some said that Shabibi wanted to RV but Maliki wouldn’t give up any power and Shabs didn’t want Maliki to become a dictator with all of Iraq’s post-RV newfound wealth. Others just thought that Maliki didn’t want to RV because he is evil and wants to keep his people poor. But here we see what Shabibi’s removal was really all about. There was a dispute between Maliki and Shabs over how to deal with the issue of dinar being smuggled into Iran. It now appears that by removing Shabibi Iraq is left with a chaotic situation that is taking a toll on the dinar’s value in country.If they bring Shabs back it might help them to get the smuggling under control and bring the market price up, but it likely won’t raise the official value of the IQD one iota. Once again, the gurus are proven to be clueless.

Also, in May a reader sent me some very interesting links. You can draw your own conclusions.